Financial Conduct Authority chairman John Griffith-Jones has thrown his support behind abolishing the approved persons regime but warned it could be a “lawyers’ paradise”.
Speaking at the Association of British Insurers biennial conference today, Griffith-Jones said it is important to have more individual responsibility in the sector.
But he said the FCA has work to do in creating effective parameters of individual responsibility as it could lead to legal challenges.
Yesterday the Government revealed plans to abolish the approved persons regime for all regulated financial services staff after recommendations by the parliamentary commission on banking standards.
It outlined plans to introduce a senior persons regime for senior financial services staff and a wider licensing regime for the rest of the regulated sector.
Griffith-Jones said: “One of the frustrating things I saw my predecessors at the FSA get caught up in was when something went wrong there was nobody to blame.
“People will have a very clear macro responsibility so they are responsible for what goes on in their division and saying you are a busy guy is no longer a day one defence.
“How much more responsibility is open to question and it is a lawyer’s paradise but we will get there. I don’t really see why it should be different in insurance, banking or the whole of the regulated sector. It is a good move.”
Griffith-Jones also played down the impact of a criminal offence for reckless banking, claiming the senior persons regime would be much more effective at stopping bad behaviour.
He said: “Bad business judgement is not a criminal act and the bar will be set very high so I don’t think it will catch many people. I don’t think it is a nuclear weapon but it is a useful one to have.”